The Craft Beer Explosion: Why Here? Why Now?
We are in a golden age of beer. For example, in the small upstate New York city where I live, the beer store sells more than 400 different beers from some 150 breweries, 29 states, and 15 countries. The supermarket is not far behind. Even the convenience stores offer a selection of acclaimed craft beers. There’s also a fledgling brewpub. My city is hardly unusual in this regard. By now, every American state except one has at least a dozen craft breweries (most have at least 50), and at the national level the numbers of breweries and brewpubs are at all-time highs. The diversity of beer styles is dizzying, and beer drinkers have a seemingly endless array of books, websites, and apps to guide them.
The craft beer revolution has been international, but the United States has been at the forefront. This may seem ironic to the countless cosmopolitan beer drinkers, including many Americans, who for decades derided American beer as bland, watery, and homogenous. How did America become the heart of the craft beer movement? Why wouldn’t a country with a richer beer-producing history like Germany, Belgium, or England have assumed that mantle?
America’s lack of a distinct, indigenous brewing tradition was actually conducive to the rise of craft brewing, as defined by the Brewers Association as “small, independent, and traditional,” to which we might add eclectic. German brewers are renowned for the freshness and quality of their product, but their longstanding adherence to the 1516 Reinheitsgebot purity law, forbidding any ingredients besides barley, hops, and water, inhibited innovation and stylistic diversity. Belgian and English beers and ales were more diverse but also bound by customs and tastes that stabilized over the course of centuries. By contrast, American immigrants brought various brewing traditions with them, and American tastes were more malleable. Around the 1850s, English ales (notably the “Albany ales” that resembled today’s stronger India pale ales, or IPA’s) were eclipsed by German lagers, which were themselves eclipsed by 1900 by “American adjunct pilsners,” which supplemented the barley with corn or rice to produce a smoother, paler, blander beer. Yet an estimated 3–15% (according to historian Amy Mittleman) of the American beer-drinking public preferred something else. In the late nineteenth century American breweries were indeed making a variety of alternatives, including ales, porters, stouts, wheat beers, and steam beers. Three to 15% of such a large consumer market as the United States would seem enough to sustain a sizable fringe market of non-pilsner beers and ales, but due to a variety of factors – notably the temperance movement, prohibition and post-prohibition regulations – that niche was underserved for most of the twentieth century. The long-delayed filling of that niche is the story of the craft beer revolution.
Like beer itself, the roots of the craft beer revolution were international, even though it would be strongest in America. The crucial decade was the 1970s, when the industry’s increased consolidation and ever-blander product collided with key social and economic changes. American adjunct pilsners had become the standard-bearer for blandness, but complaints about homogenized, boring beer were common in Europe as well. In Belgium, traditional ales had long since been supplanted by lager, “the beverage of moderation.” In England, many beer drinkers decried the industry’s concentration and lack of variety. The trends were not new, but the times were different. In the 1970s the counterculture spread to many aspects of everyday life, fueling a do-it-yourself aesthetic and a growing demand for organic food and drink. Weak economic performance in the 1970s dealt a blow to confidence in both big government and big business. In America, Vietnam, Watergate, and domestic unrest further reduced confidence in government. Brewpubs and homebrewing had been effectively banned by post-Prohibition regulation at the federal and state level, but in this restless period Americans were disinclined to go along with them. The increased “blandification” of beer, accelerated by the rise of even blander “lite” beer, brought a backlash against “corporate beer.” To many, homebrewing was the only way to get good beer, which often meant the type of beer they had enjoyed while traveling or working in Europe. To some, it was also a rebellion against big business and big government. Similar trends were afoot overseas, notably in England, where the Committee for Real Ales (CAMRA) pushed for cask-conditioned ale and localized pubs, and in Belgium, where “nostalgic consumption” of traditional strong ales and small-brewery beers led to a more diversified market. Encyclopedic beer guides by Michael Jackson and other writers lovingly described prized international beers and America’s obscure new microbreweries, Anchor Steam and New Albion, further whetting the appetites of restless American beer drinkers.
The rising ranks of homebrewers and other Americans craving heartier beer brought pressure for deregulation of homebrewing and brew pubs. By the late 1970s, just as the federal government had begun deregulating several industries, many states had already legalized homebrewing, and in 1978 Congress passed an amendment that ended the effective federal restriction on homebrewing. Homebrewers are often considered the farm system for breweries – homebrewing guru Charlie Papazian estimates that 90 percent of professional brewers began as homebrewers – and they also did much to juice the demand for craft beer, by exposing themselves and their friends to it. The next step was to legalize brewpubs, the first of which opened in Yakima, Washington, in 1982. Brewpubs would soon spread rapidly, as would their legalization: from 10 states in 1988 to 30 in 1990 to 50 in 1999. Brewpubs were vital stepping stones as well, as many if not most successful craft breweries began as brewpubs. As important as the removal of these legal constraints was, the new brewpubs and breweries clearly would not have lasted without a market. The fact that the number of microbreweries rose in every year but one of the 1980s and 1990s suggests that demand was strong and growing. (The number of breweries has continued to skyrocket, growing almost every year to an all-time high of over 3,300 today, or over 5,000 if one includes brewpubs.)
Not all of the microbreweries stayed small. Some of the pioneers, notably Sierra Nevada and the Boston Beer Company (which makes Samuel Adams), became so successful that small-batch production was no longer feasible. They also showed that artisanal-quality beer could be produced in mass quantities and that many gourmet beer drinkers did not make a fetish of smallness. “Microbrewery” gave way to “craft brewery” in an official sense in 1996 when the leading American microbrewers group renamed its meeting the Craft Brewers Conference. In an unofficial sense “craft brewery” overtook “microbrewery” in common usage around 2008 (based on searches of The New York Times). The Brewers Association, the leading craft brewers trade association, recently raised its size limit for what constitutes a “craft brewery” to a level high enough to include big breweries like the Boston Beer Company and even Yuengling, whose products and ingredients are similar to those of the megabrewers but which has a long history of independence from them.
The rising demand for craft beer relates to some other recent developments. Rising inequality since the 1970s has created many more millionaires, which raises the demand for luxury goods like expensive craft beers. Rising inequality also tends to put pressure on the middle class to emulate the consumption of the wealthy; and craft beer, although expensive, is affordable as posh beverages go. Technological developments are perhaps most important of all, as they make it easier for craft beer enthusiasts to find their favorite products and explore new ones. Numerous smartphone apps connect consumers to beer stores, brewpubs, and breweries, giving them free advertising and invaluable word of mouth. Supermarkets and other stores are able to stock a much wider variety of products in general, including specialty beers, thanks to such developments as bar code scanners and computerized inventory management. Continued deregulation has helped as well, as states increasingly allow mail-order purchases of beer, thereby broadening the reach of small breweries.
Today’s American beer market is a bifurcated one, with light adjunct pilsners still dominant but craft beer by far the fastest-growing segment. In 2016 craft beers accounted for 12.3% of all beer sold by volume and, being more expensive, 21.8% of beer sales by dollar. Papazian projects that craft beer’s market share will rise to 30% by 2025. By now many new craft breweries have come and gone, yet their total numbers continue to skyrocket, nearly tripling from 2012 to 2016. This is an unusual market, in which the vast majority of firms stay in business but remain small, and in which customers constantly crave new and varied products. It fits with the locavore movement and the “bourgeois bohemian” appeal of all things artisanal, as well as the profusion of local wineries, distilleries, cideries, and farmers’ markets. If craft beer seems like a fad, that may be due to the contrast with America’s famously bland adjunct pilsners. In fact, American craft beer has deep roots in the nineteenth century’s variety of beer styles and profusion of small local breweries. Combine those historical roots with modern information technology, and one gets the current golden age of beer, with an unprecedentedly diverse selection of carefully crafted beers. The best may be yet to come, as the craft beer explosion shows no sign of dying down. Indeed, as new cohorts of American beer drinkers become accustomed to craft beer styles, the market’s expansion could continue for a long time.
Ranjit S. Dighe is Professor of Economics at the State University of New York and a past president of the Economic and Business History Society. His specialties include the economic history of Prohibition. His first beer was a Budweiser.